Prima facie case justified waiver of pre-deposit and stay of recovery pending appeal.

CESTAT, New Delhi allowed the stay application after finding a strong prima facie case on merits, and waived pre-deposit of duty and penalty. Recovery of the disputed dues was stayed until disposal of the appeal, so enforcement action remained suspended pending final hearing.

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Issues: Whether the appellants were entitled to unconditional waiver of pre-deposit and stay of recovery of the duty and penalty demanded on crushed stones used in bridge construction, where the adjudicating authority had not conclusively examined whether the activity amounted to manufacture.

Analysis: The amount of duty was demanded in respect of crushed stones used in construction of bridges. The order under challenge had not answered the question whether the activity amounted to manufacture, and that issue required detailed scrutiny of the facts and circumstances. The matter had earlier been remanded by the Tribunal for fresh decision, including consideration of limitation and marketability, and the adjudicating authority had again not properly considered the matter. On that basis, the appellants were found to have a strong prima facie case.

Outcome: The stay application was allowed unconditionally, and pre-deposit of the duty and penalty was waived with recovery stayed till disposal of the appeal.

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